Lateral Capital®
Opportunity Fund, LP
Updated to June 30, 2024
Headquartered in Sarasota, Florida, Lateral Capital is a Micro Venture Capital Fund for accredited investors. Over the last ten years, our Limited Partnerships have invested in 87 companies across 21 states. As of June 30, 2024, projected gross returns for these funds are about 3.2X invested capital (MOIC), ahead of the 2.2X to 2.6X “industry average” for investments in Early-Stage Companies.
Vintage | Number of Investments To Date | Amount Invested To Date ($ Million) | Amount Returned ($ Million) Actual As Of June 30, 2024 Unrealized Projected1 Projected Total1 | Estimated Fair Value of Active ($ Million) | Gross TVPI (MOIC)2,3 | Projected Returns (MOIC)1,3 Gross Net | |||
---|---|---|---|---|---|---|---|---|---|
2015 | 24 | $4.3 | $2.3 | $13.1 | $15.4 | $4.8 | 1.6X | 3.5X | 2.8X |
2019 | 30 | $5.8 | $0.1 | $16.5 | $16.6 | $7.0 | 1.2X | 2.9X | 2.3X |
2021 | 30 | $5.5 | $0.0 | $18.8 | $18.8 | $7.5 | 1.4X | 3.4X | 2.7X |
LCOF⁴ | 9 | $1.0 | $0.0 | $3.2 | $3.2 | $1.3 | 1.3X | 3.2X | 2.6X |
93 | $16.6 | $2.4 | $51.6 | $54.0 | $20.6 | 1.4X | 3.2X | 2.5X |
1. Definition of Projected Returns– Gross Returns do not include Management Fees, the cost of operating the Funds or Carried Interest. Net Returns are estimated based on projected Management Fees and costs. Projections are based on a variety of inputs believed to be reliable but are strictly not guaranteed. Columns may not add due to rounding.
2. Definition of TVPI – TVPI or Total Value to Paid-In Capital is the ratio of the current value of remaining investments, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund.
3. Projection of Gross/Net Returns– The GP’s projection of what the Funds will return when all investments are realized. This is based on actuals to date, projected outcomes and projections of expenses to the end of each Fund.
4. Initial LCOF Investments– We have already made the first nine investments in LCOF, at about $100,000 each.
Our current Fund is the Lateral Capital Opportunity Fund, LP (LCOF). Launched in March 2024, we have raised $2.4MM to date; on a path to $5-10MM. For the sake of consistency, the documents for the LCOF have not been updated since the first documents were prepared in January 2024. Currently, there is no deadline for new investors to join the LCOF.
Overview Of Offering – Lateral Capital (LC) is offering interests in its fourth syndicated Limited Partnership, the Lateral Capital Opportunity Fund, LP (LCOF). LCOF is investing primarily in companies where earlier Lateral Capital Funds already have positions. We believe these businesses are now somewhat de-risked and that they have potential for a profitable exit in the next 5 years – beginning as early as 2025/26. The nine investments we have made to date are shown below. New investors would participate pro rata:
Wireless control system for lower cost delivery of industrial steam traps
https://imperiumtechllc.comIndustrial magnet manufacturing with no rare earth materials
https://nironmagnetics.comIn addition, we are on track to make far more investments as soon as we can raise the additional funds:
Rotating detonation aircraft with Mach 5-9 hypersonic capability
https://venusaero.comDry electrode process for batteries increasing capacity and eliminating high risk solvents
https://ateios.comWithin these guidelines, Lateral Capital has made investments in a wide range of categories – from medical devices to industrial products; from specialty B2B software to a therapy for Alzheimer’s. We do not invest in distribution-driven categories like consumer packaged goods or in businesses which are location-dependent – restaurants, real estate, etc. Similarly, we do not invest in companies engaged in online gambling, computer games or marijuana.
Most of our investments have been made alongside Angel groups which “discover” most of the companies we meet. These have included Band of Angels (Palo Alto), Seraph Group (Atlanta), Golden Seeds (New York), Tamiami Angels (Naples), Central Texas Angels (Austin) and TCA Venture Group (Southern California). We have also invested in companies which have presented at SXSW and Angel Capital Association events.
Lateral Capital is run by long-time Procter & Gamble executive and former Pillsbury CEO, John Lilly. He is joined by Tim Kost, as Managing Director and CFO and by experienced Broker/Dealer assistant Michelle Ballentine. Limited Partners are mostly individuals including CEOs, CFOs and investment bankers across the U.S.
Current Situation – Rapid increases in interest rates have greatly reduced availability of private capital to all Early-Stage Companies. Investments in Early-Stage Companies declined for six straight quarters through the end of 2023 and have not recovered. This situation makes for a great opportunity to invest in Early-Stage Companies which have short-term capital needs – but excellent longer-term potential.
Lateral Capital Opportunity Fund Offering– The Lateral Capital Opportunity Fund will invest up to $10MM in 25-30 Early-Stage Companies, depending on the amount of capital we raise. Many of these companies will be add-on investments in the 61 active companies from our prior funds. These are businesses we already know something about, in which we have increasing confidence and which need more capital to get to an exit. On a select basis, we may also invest in other Early-Stage opportunities, particularly in companies which operate in spaces adjacent to our existing investments.
To kick off the Fund, an affiliate of the General Partner contributed investments in three companies where investments have recently been made. These were contributed to the Opportunity Fund at cost, plus reimbursable transaction expenses of no more than $5,000 per company. On top of these companies, the Fund has made investments in six additional companies during 2Q2024. This gives investors of LCOF unusual visibility into the companies in which they would be pro rata investors.
Details Of The Offer – Here are the key elements of how the Fund will operate:
Additional Information Available– We have prepared several introductory presentations which are downloadable as .pdfs by clicking the boxes below. These are fairly standard for investments in Venture Capital funds, but they are the official documents which govern the Fund. If you have questions, we encourage you to discuss them with us or your Legal/Financial Advisor. Please be aware that for the sake of consistency, these documents have not been updated since the Fund documents were prepared in January 2024.
Third Party Verification Process– To comply with SEC regulations, all Prospective Investors will need to provide third party verification that they are accredited investors. The general requirements are that an investor have $200,000 in annual income ($300,000 for those filing jointly) with reasonable expectations to continue at this level. Alternatively, investors could be deemed accredited if they have $1,000,000 in assets beyond their principal residence.
Before we can accept your investment, we will need your lawyer, Financial Advisor or CPA to confirm your accredited investor status. This is surprisingly simple. In the signature packet below, there is a DocuSign form for you to fill in and sign. When it is returned to us, we will send it on to the Advisor you name for their signature. We do not need any financial data from you. We just need the signature of someone who has knowledge of your financial condition and can confirm that with us on a “blind” basis.
Signing Up With The Fund– he process for joining the Lateral Capital Opportunity Fund is straightforward. Open the Signature Packet by clicking the box below and fill in the signature pages on DocuSign. When the Third Party Accreditation is received back from your Advisor, we will countersign the documents and return them to you. At that time, you will also receive a Capital Call for the first 40% of your commitment.
Next Steps – We are happy to set up a Zoom to talk about any aspect of our plans for the Lateral Capital Opportunity Fund. Please contact Michelle Ballentine to set up a time:
Lateral Capital Opportunity Fund, LP ,
Attention: Michelle Ballentine
1500 State Street, Suite 201, Sarasota, FL 34236
612-330-5055
michelle.ballentine@lateralcapital.com
The presentation preceding these pages and any related oral or written discussion (variously described as the “Materials,” the “Information” or this “Presentation”) is governed by the limitations detailed below.
Introduction – This Presentation was produced by Lateral Capital Management, LLC (LCM) on behalf of Lateral Capital Opportunity Fund General Partner, LP (LCOFGP) for the purposes of engaging investors in considering an investment in Lateral Capital VII, LP (LCOF). While LCM is the author of this presentation, the Disclaimers described below apply to all Lateral Capital entities, including LCM, Lateral Capital Advisors, LLC and individual Lateral Capital funds.
General Disclaimer – By acceptance hereof, you agree that (i) the information contained herein may not be used, reproduced or distributed to others, in whole or in part, for any other purpose without the prior written consent of LCM; (ii) you will keep confidential all information contained herein not already in the public domain; (iii) the information contains highly confidential and proprietary ‘trade secrets’ (some of which may constitute material non-pubvlic information); and (iv) you will only use the information contained in this Presentation for informational purposes and will not trade in securities on the basis of any such information. The presentation and other ancillary documents include various examples or subsets of Lateral Capital’s existing and past investments. Such information includes, among other things, portfolio company valuations and fund performance, which includes Gross MoM and Gross IRR, all estimated as of specific dates as indicated. The portfolio companies highlighted have been chosen generally for the purposes of illustration and not based on performance. Investments in other companies may have materially different results. There is no assurance that any portfolio companies discussed herein will remain in the relevant fund at the time you receive this information.
Important Securities Law Information– This Presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities and may not be used or relied upon in evaluating the merit of investing in LCOF. A confidential information memorandum (including any supplements thereto, the “CIM”) and definitive documentation relating to LCOF or our investments therein, including constitutive documents and subscription documents (collectively, the “LCOF Documents”), will be made available and must be received by you prior to subscribing for an interest in LCOF. An offer or solicitation for LCOF will be made only through the CIM, which will contain additional information about the investment objectives, terms and conditions of an investment in LCOF and risk disclosures that will be important to any investment decision regarding LCOF. The information set forth herein is not a part of or supplemental to the CIM, the LCOF Documents or any documents ancillary thereto. The information set forth herein will be superseded in its entirety by the CIM and the LCOF Documents. In the case of any discrepancy between the information contained herein and the CIM or the LCOF Documents, the CIM and the LCOF Documents will control.
Representations and Warranty – No representation or warranty is given in respect of the information contained herein, and neither the delivery of this document nor the placing of any interests in LCOF will under any circumstances create any implication that LCOF has updated the information contained herein. Information throughout the Presentation provided by sources other than LCOF has not been independently verified. Differences between past performance and actual results may be material and adverse. Past performance is not necessarily indicative of future results. Unless otherwise stated, any reference to MoM and IRR refers to Gross MoM and Gross IRR. Gross MoM is calculated on a gross basis and does not reflect the effect of fund expenses, taxes borne, or to be borne, by investors in LCOF, and would be lower if it did. These materials may include comparisons to an index (e.g., S&P 500, Russell 2000 and MSCI World Index or other benchmarks for publicly-held securities) against the performance of LCOF. The performance of these indexes is provided for reference only. LCOF differs from an index in that, among other things, it is actively invested and is subject to various fees and other expenses. Investors cannot invest directly in the index.
Risk of Loss From Investments– Any projections, estimates, forecasts, targets, prospects, returns and/or opinions contained in these materials involve elements of subjective judgment and analysis and are based upon the best judgment of LCM as of the date of these materials. LCM does not take responsibility for such projections, estimates, forecasts, targets, prospects, returns and/or opinions. Any valuations, forecasts, targets, opinions or projections expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. No representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any valuations, forecasts, targets, estimates or opinions described in these materials.
Forward-Looking Statements – All statements in this presentation (and oral statements made regarding the subjects of this presentation) other than historical facts are forward- looking statements, which rely on a number of estimates, projections and assumptions concerning future events. Such statements are also subject to a number of uncertainties and factors outside LCM’s control. Such factors include, but are not limited to, uncertainty regarding and changes in global economic or market conditions, including those affecting the industries of Lateral Capital portfolio companies, and changes in U.S. or foreign government policies, laws, regulations and practices. Opinions expressed are current opinions as of the date of this presentation. Should LCOF’s estimates, projections and assumptions or these other uncertainties and factors materialize in ways that LCM did not expect, actual results could differ materially from the forward-looking statements in this presentation, including the possibility that investors may lose a material portion of the amounts invested. While LCM believes the assumptions underlying these forwardlooking statements are reasonable under current circumstances, investors should bear in mind that such assumptions are inherently uncertain, subjective and that past or projected performance is not necessarily indicative of future results. No representation or warranty, express or implied, is made as to the accuracy or completeness of the information in this presentation, and nothing shall be relied upon as a promise or representation as to the performance of any investment. Investors are cautioned not to place undue reliance on such forward-looking statements and should rely on their own assessment of an investment.
Information Regarding Determination of Targeted Returns – LCOF believes the targeted returns for certain investments included in these materials are reasonable based on a combination of factors, including the performance of previous Early Stage investments, Lateral Capital’s historical track record and LCM’s assessment of prevailing market conditions and investment opportunities. However, LCOF’s targeted returns for certain investments are not a predication or projection of actual investment results and there can be no assurance that the targeted returns will be achieved. Investors should also be aware that relatively high targeted returns, such as those included in these materials, entail concomitantly greater risks of adverse and volatile investment results. The targeted return of any individual investment can be lower or higher, depending on the nature of any individual investment. LCM’s evaluation of a proposed investment is based, in part, on LCM’s internal analysis and evaluation of the investment and on numerous investment-specific assumptions that may not be consistent with future market conditions and that may significantly affect actual investment results. No representation or warranty is made as to the reasonableness of the assumptions made or that all assumptions used in calculating the targeted returns have been stated or fully considered. LCOF’s ability to achieve investment results consistent with its targeted returns depends significantly on a number of factors in addition to the accuracy of such assumptions. Such factors include, among other things, LCM’s ability to execute its investment strategy successfully and an assumption that investments will be exited in less than ten years after investment, which cannot be assured. Investments may be held substantially shorter or longer than LCM’s exit assumption, which can significantly affect the investment’s performance. The past performance of Lateral Capital Funds is not necessarily indicative of future performance and there can be no assurance that LCOFI will succeed in achieving the targeted returns discussed herein. Such targets may be adjusted in light of available opportunities or changing market conditions.
This Presentation is Not Financial or Investment Advice – The Materials do not constitute investment advice, recommendations or solicitations to purchase or sell securities mentioned herein, if any. LCM is not, and does not provide services as an investment advisor, investment analyst, broker, broker-dealer, market-maker, investment banker or underwriter. Information in this presentation, including forecast financial information, if any, is for information purposes only and should not be considered as advice or a recommendation with respect to holding, purchasing or selling securities or other financial products or instruments and does not take into account the reader’s particular investment objectives, financial situation or needs. Before acting on any information, readers should consider the appropriateness of the information and should seek independent financial advice. The contents hereof should not be construed as investment, legal, tax or other advice and you should consult your own advisers as to legal, business, tax and other related matters concerning an investment in LCOF. Unless otherwise noted, the information contained herein has been compiled as of January 2024 and there is no obligation to update the information provided herein.
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